Saturday, October 31, 2009

Big surprise... an agreement was reached between... different sections, different agents of the same ruling class. And on what did these different clowns in the same circus agree? They agreed on a charade. A pantomime. A folie a deux.

Said Alphonse to Gaston, "After you." Said Gaston to Alphonse, "Oh no, after you. I insist."

Said Micheletti to US assistant secretary of State for Western Hemispheric Affairs Thomas Shannon, "I'll pretend to agree to recognize that Zelaya might return to office four weeks prior to new elections, with no control over the military, with no agitation for a constituent assembly, with no penalty to coup-iers."

Said Zelaya to Shannon, "I'll pretend that I'm actually returning to office, with no control over the military, with no constituent assembly, with no penalty to coup-iers, and proclaim a great victory."

Said Tom to Hillary, channeling the former president, "Mission accomplished."

This agreement is an attempt at misdirection, at disorientation of the resistance to the coup, which of course, is more than a resistance to the coup but the initial eruption of a revolutionary struggle.

Even if accepted by the Congress and the Supreme Court, the agreement pretends to allow Zelaya to return to office in only a ceremonial role, as the military would be under the control of the electoral commission, and the election is going to be held in 4 weeks. And of course, the old razzle-dazzle of truth commissions, a government of national reconciliation blahblahblah will function as spectacle, to obscure and distract from the real, material, economic circumstances that precipitated the movement into the streets at the opportunity of Zelaya's removal.

The police, secret police, paramilitary organizations, the practitioners of terror against the rural and urban poor, are maintained in their positions without penalty except of course the revolutionary penalty that the movement can impose itself-- and if that should occur, Zelaya, Micheletti, Shannon, Clinton, Reich, the OAS, will be united in a government of international reconciliation denouncing such self-defense by the poor as "destabilizing" to the prospects of "democracy," detrimental to the legitimacy of the truth commissions blahblahblah-- all that junk that capitalism circulates as exchange value without any corresponding use value.

The agreement prohibits action on behalf of a constituent assembly until after January, when a new government is in power. The bourgeoisie know that the key to maintaining political power when bankruptcy looms is the same as the key for maintaining property and business by any individual capitalist when economic bankruptcy looms--- delay. Restructure, reorganize, even if its only the deck chairs on the sinking ship. In short, buy time-- buy time, buying time, of course is literally what makes the bourgeoisie bourgeoisie. The time expropriated, equally of course, is that time that might,could, must be seized by others; that time that belongs to those others; that time that belongs to those others who labor in the maquiladoras, on the plantations, on their minifundias .

A constituent assembly is no solution to the problems faced by the workers and poor in Honduras as such an assembly is a political form, reproducing in essence the illusory separation of property from social struggle, an illusion that, like the buying of time, also allows the bourgeoisie to function as the bourgeoisie, as a ruling class with class obscured. The conflict in Honduras is, however, exactly the social combat that dispels such illusions, that identifies class and property as the content, the substance of the struggle. As such, success for the workers, urban and rural poor of Honduras, exists outside and beyond the demands for a constituent assembly. Any possibility of success necessarily exists only in the organizations those workers, those poor create in the self-defense of the reclamation of their own time.

The bourgeoisie, however, see, feel, sense, behind the demand for the form of the constituent assembly just that substance. In their recognition the historical impossibility, the obsolescence of their own political forms, the bourgeoisie are in substance admitting the obsolescence of their property, of themselves, of their time.

Friday, October 16, 2009

...as opposed to the "dollar is dead, or dying and governments are getting close to abandoning its in favor of the [yen, euro, yuan, SDR, virtual currency, Krugerrand, pick any or all, or make up you own]...." being sung in harmony by the hustlers, hucksters, flim-flammers of pseudo-left, populist right, China promoters, Lula lovers, Russian dolls etc. etc. etc.

First point of clarity: governments do NOT and cannot control currency exchange markets. Central bank reserves of the world's largest central banks combined do not approach the currency reserves of the private speculators, traders, funds, investment- merchant- commercial banks making and trading in those markets. And while those private sources trade the dollar down, central bankers continue to purchase dollar-denominated instruments for holding reserves.

Why do the central banks do this? Because there is no alternative. Because there is no market as huge, as liquid, as accessible as the market for US Treasury instruments.

Second point of clarity: the movement away from the dollar and into other currencies is not a vote on the future of the US economy; is not an index to the "cracking" of the facade of US primacy; and certainly does not occur in isolation.

The movement away from the dollar by those same funds, traders, etc. is part of the general "relaxation," the sigh of relief and hope that the worst is over, and a return to "RISK" as a way to generate some actual RETURNS.

The movement away from the dollar is part of a trend, process, dynamic that has driven up prices and volumes in the stock exchanges of the US, the developed countries, and emerging markets.

The movement away from the dollar is part of the trend that has seen increases in aluminum prices despite immense overproduction, improvement in steel prices, oil cracking $70/barrel, the issuance of huge amounts of corporate debt snapped up in the bond markets, the rise in commodity prices, etc. etc.

The trading in the markets is being fed by streams of liquidity moving out of the safety of government guaranteed programs and issues; other streams of liquidity provided directly to banks and traders by governments, bankers and traders who, while more than happy to borrow from the Fed or the Treasury at zero interest rates, will not invest in Fed or Treasury instruments that do not offer enough return, or enough return to offset the risks in the instrument itself [i.e. FNMA, FMAC security issues].

Those who think the flight from the dollar indicates the weakness of US capitalism, the loss of the dollar's centrality to capitalist exchanges, are making an equal and opposite mistake to those who not so long ago saw the soaring price of oil as an index to the approaching post "peak" production era, and the soon to disappear supplies of oil. In the case of oil, there was the confusion of use-value with exchange value. In the case of the dollar, there is confusion of money as a store of value and a means of circulation, with its, money's own need, to function as "capital"-- seeking out profit, an expansion of value.

Thursday, October 01, 2009

There were some events of importance in the world yesterday, apart from the spectaclesurrounding Roman Polanski, although nothng of that significance as Brad and Angelina did not adopt the octuplets.

For one thing, continuing the work of his predecessor, Obama [his facerapidly changing to resemble that of Ronald Reagan] followed through on theinvestigation into the legal status of workers employed by the Los Angelesbased American Apparel. The company decided to resolve the issue by firing1800 workers.

Most of those fired, reported the New York Times, were women; many the solesupport for their families. Meet the internal maquiladora, same as theexternal maquiladora.

The owner of the company, Dov Charney was busy assuring investors that thefirings would not impact business as production was already down due to therecession. Oh, happy synchronicity-- firing the workers brings the companyinto compliance with the demands of the Dept. of Homeland Security, and..right sizes the company in these difficult times. Who says markets aren'tefficient?

"Now all manner of companies face the very real possibility that thegovernment, using our basic civil power, is going to come knocking at thedoor."

Isn't that wonderful? Wonder how the US Chamber of Commerce feels aboutthat? Actually, I don't. But I do wonder why Homeland Security has such all encompassingpower-- currently the dept. has initiated audits of the employment recordsof 645 companies-- but OSHA seems to have so little. OK, I lied again. Idon't wonder, I know why.

Meanwhile... the Census Bureau reported that the TARP and stimulus programsare working just as intended as poverty rates rose in 31 states and DC in2008, with children particularly hard hit. Poverty rates for children inpoverty rose in 26 states and DC. Yes, we can! Yes, we can, can, sangthe Pointer Sisters.

Trent Lott isn't worried, as Mississippi kept its pole position as numberone with a bullet in the poverty derby with a rate of 21.2% of thepopulation existing below the poverty line. Way to go, Trent! Give us arebel yell!

Meanwhile, Venezuela will issue 3 billion dollars in bonds, denominated inUS currency in an attempt to soak up some dollars in the system and closethe gap, hopefully, between the official rate of exchange and the real,street rate of exchange. The issue is being managed by Deutsche Bank andCitigroup. So nice of Hugo to throw a little business to these twohard-pressed financial corporations

Meanwhile, I don't want to rain on anybody's parade, or parade on anybody'sgreen shoots, but the FDIC admitted its insurance fund is tapped out afteronly 95 banks have failed so far this year, and will ask for pre-payment bymember banks of premiums due over the next 3 years. Each bank remittingthe amount in full before January 1, will receive a "Get Out of Jail Free"card, endorsed by Sheila Bair and countersigned by Ben Bernacke.

In other news, none of it good for the old FDIC insurance fund, the IMFexpects write downs in the financial sector of another 1.5 trillion dollars,bringing the estimated total to 3.4 trillion dollars. Of that 3.4, 2.8 trillion in losses belongto banks. IMF also estimates that US banks have written down 60% of theirnon-performing troubled assets, but the European Union has written off only40 percent. Do the math and the estimates yield totals of $900 billion inlosses for US banks, and $1.9 trillion in losses for European banks. Whatwas it Brody said to Quint in Jaws? "You're gonna need a bigger boat."Note to Ben Bernacke-- keep those open ended credit swap lines in place forawhile.

The IMF is way too optimistic, and way underestimating the exposure of USbanks to bad loans; to commercial real estate; construction companies;private equity corporations; to commercial mortgage backed securities; tobad credit card debt. Me, ever the one to look on the bright side, thinkthe remaining exposure is about twice what the IMF estimates, and US banksare nowhere near the 60% level. Sorry, Sheila, perhaps you should get the4th and 5th years prepaid while your at it. Tell the banks to think of itas..... as a loan? No, they don't do much of that anymore. As an asset?Nah... hey tell them to think of it as a collateralized debt obligation,since you could post as collateral all those assets you absorbed as part ofthe deals persuading bad banks to take over worse banks. Then keep themoney, and give the assets right back to the banks, so we can start all overagain.

Meanwhile, CIT is facing, again, bankruptcy, again. This primary source ofcredit for small and medium and enterprises, for financing inventory andpurchase-- for "factoring," is going down, and the third time is not thecharm.

Not to worry, companies start reporting 3rd quarter results soon and thestreet is abuzz with talk of major companies, and major numbers ofcompanies, exceeding analysts' expectations. In the words of Hudson, "Ifeel safer already." Hudson also said [in Aliens. Did I mention that?]"Stop your grinnin, and drop your linen" which I think is somehow a bitmore accurate in describing the current and future conditions.

Anyway, that's the news, now back to our 24 hour coverage of the Polanskistory, with expert analysis provided by Kobe Bryant of the Los AngelesLakers, and Luis Polonia former major league baseball outfielder.